Travel websites must compensate for holiday disasters, says Government as it tackles gaps in consumer protection

Travel websites will have to pay compensation and issue refunds for holiday disasters under new consumer protections, the Government has announced.

Ministers have vowed to address concerns that holidaymakers who book package deals online are not given the same protection as those who use travel agents.

The Government today unveils plans for new regulations that will make travel websites "responsible for the entire holiday" - even if different companies supply the flights and hotels.

The regulations will protect holidaymakers if one of the firms that they are booking with collapses or in the event that the holiday is not as advertised.

Margot James announced the changes to package holiday regulationsCredit:
Martin Pope

Margot James, the consumer minister, said: "While consumer laws protect millions of holidaymakers from the fallout if a travel company goes into administration, the way we book holidays has changed significantly in recent years and it is important that regulations are updated to reflect this.

“On average UK households put aside £100 every month for their holidays. The proposals outlined in this consultation will ensure that an extra 22 per cent of holidays can be booked online with holidaymakers safe in the knowledge that they will get their hard-earned money back if something does go wrong.”

Last year 42 per cent of people going abroad booked their holidays on websites such as Booking.com or Expedia

The new regulations, which will be subject to a six-week consultation, come after the rise of travel websites led to a significant gap in consumer protections.

Last year 42 per cent of people going abroad booked their holidays on websites such as Booking.com or Expedia. Holidaymakers who book online do not enjoy the same consumer protections as people who book at travel agents.

The consultation document says: "Technical innovation and in particular the growth of the internet and mobile technologies, have opened up new ways of buying and selling holidays. This has provided increased choice and flexibility in the travel market, allowing consumers to mix and match components of a holiday to suit their particular needs.

"However it has also created a gap in protection as these new methods of packaging holidays are outside the scope of the current Regulations."

The consumer group Which? has called on Government to act so that consumers can have “peace of mind”.

It said: "Holidaymakers should be able to book their trips without worrying about whether they will be protected if their travel agent, airline, or hotel goes bust.”

Travel websites could also be required to be more clear with their customers about their rights to a refund before they book their holidays.

The Association of British Travel Agents has welcomed the Government’s announcement and said they will create "clearer and stronger protections for holidaymakers".

The consultation on package holidays comes as research shows that families are paying hundred of pounds in tax alone to travel abroad.

Families have to pay hundreds of pounds in holiday taxes

The Taxpayers' Alliance warned that holidaymakers are being hit by a combination of VAT on holiday purchases, Insurance Premium Tax and Air Passenger Duty.

The Alliance said that a family of four travelling to Spain pays £137.27 in tax, while a family of four travelling to Florida pays £261.27. Philip Hammond, the Chancellor, is being urged to cut air passenger duty in his Autumn Budget.

Tim Alderslade, chief executive of Airlines UK, the trade body for UK registered airlines, said: "Air Passenger Duty is the highest tax on air travel in Europe and an additional burden on families taking a well-earned break.

"The Treasury should be upfront about why this levy has been allowed to rise to its current level when competitor countries are busy cutting or abolishing their respective aviation taxes. "